Privately Negotiated Facility Fees at Ambulatory Surgery Centers and Hospitals

Am J Manag Care. 2024;30(11):In Press

Takeaway Points

• On average, hospital facility fees are more than double the ambulatory surgery center (ASC) facility fees for common outpatient procedures.
• Clinicians can use this information to carefully select appropriate and healthy patients for the ASC setting to decrease patient costs.
• States with certificate-of-need laws should reconsider whether further ASC expansion could reduce spending growth or increase access to care.

Ambulatory surgery centers (ASCs) may enhance access to procedural care with lower costs and similar outcomes compared with hospitals for appropriate patients,¹ although prior cost comparisons between ASCs and hospitals have been limited to specific procedures, states, and payers.^2,3

We performed a cross-sectional analysis of plan-specific negotiated facility fees disclosed by private payers under the Transparency in Coverage Act from CMS to characterize differences in prices for common outpatient procedures between ASCs and hospitals. Facility fees were collected from Turquoise Health’s Rate Sense, which contains plan-level prices disclosed by 4 large national payers (Anthem/Blue Cross Blue Shield [BCBS], Aetna, Cigna, and UnitedHealthcare [UHC]) and the top 5 payers by beneficiary count in every state. We included all collected facility fees (negotiated or fee schedule) without applied modifiers. We included the 10 highest-volume procedures at ASCs by 2022 Medicare Part B claims in 4 predominantly outpatient procedural specialties (gastroenterology, ophthalmology, orthopedics, and urology). Included facilities met the following criteria: available payer-disclosed facility fees as of July 21, 2023; 2022 Medicare Part B ASC volume of 30 or more cases; and participation in CMS payment systems.

For each procedure, we performed the following calculations: (1) normalized facility fees to CMS wage indices; (2) determined median facility fee at each facility across all plans; (3) summarized subset national mean (SE) facility fee for ASC and hospital subgroups; and (4) calculated percent hospital markup relative to ASCs. We performed mixed-effects modeling using facility type as a fixed effect and procedure, payer, and facility state as random effects. We performed analyses using R 4.3.1 (R Foundation for Statistical Computing) and Prism 10.0.2 (GraphPad Software). We used Student t tests to compare continuous variables.

Our analysis included 55 payers and 4950 total facilities, of which 3254 (65.7%) were ASCs and 1696 (34.3%) were hospitals. Our analysis included facilities in all 50 states. The geographic distribution of included ASCs and hospitals was similar: South, 43.2% of ASCs and 43.6% of hospitals; West, 27.0% and 21.7%, respectively; Midwest, 15.2% and 19.0%; and Northeast, 14.5% and 15.7%. The plurality of prices (40.8%) were disclosed by Aetna, with the remainder disclosed by Anthem/BCBS (26.2%), Cigna (16.8%), other insurers (15.6%), and UHC (0.7%).

For all procedures, mean facility fees were significantly higher at hospitals compared with ASCs (P < .0001 for all) (Table). The mean facility fee difference between ASCs and hospitals ranged from $1515 (arthrocentesis) to $5717 (knee arthroplasty). Mixed-effects modeling revealed that, on average and independent of procedure type, facility fees are $3077 (95% CI, $3017-$3137; P < .0001) higher at hospitals compared with ASCs. Hospital fees on average were more than double ASC fees; mean hospital markup relative to ASCs ranged from 101% (tendon sheath incision) to 167% (blepharoplasty).

Our findings are directionally consistent with analyses of differences in facility fees for colonoscopy between hospitals and ASCs,⁴ although we observed higher prices as a result of several methodological differences, such as the inclusion of additional insurers and exclusion of fees with procedural modifiers (eg, for reduced services or discontinued procedures). Higher hospital fees may reflect higher costs of care delivery, as hospitals attract sicker patients and incur additional expenses (ie, maintaining capacity for emergency surgery), whereas ASCs generally care for healthier patients and a smaller subset of conditions. Hospitals may also command higher fees due to greater market power; alternatively, ASCs may negotiate lower fees to compete for patient volume.

Our study has limitations. First, our findings may not be generalizable to other procedures or payers, and collected data are contingent on insurer disclosure and may be subject to inaccuracies. Second, we were unable to estimate differences in out-of-pocket costs, which vary according to plan benefit design.

Given substantial fee differences between ASCs and hospitals, states with certificate-of-need laws should reconsider whether further ASC expansion could reduce spending growth or increase access to care. Such reforms should include safeguards against financial conflicts of interest among owners (ie, physicians or private equity firms)⁵ and prioritize expansion targeting underserved patient populations.⁶ Our findings suggest that private payers may be able to achieve substantial savings through implementation of site-neutral payment reforms for commonly performed, low-risk procedures, although such policies could reduce hospital revenues, with negative implications for patient access.

Acknowledgments

Daphne T. Hao and Vinay K. Rathi, MD, MBA, contributed equally to this work and are listed as co–first authors.

Author Affiliations: Pace Center for Civic Engagement, Princeton University (DTH), Princeton, NJ; Department of Otolaryngology–Head and Neck Surgery, Medical University of South Carolina (VKR), Charleston, SC; now with Department of Otolaryngology–Head and Neck Surgery, The Ohio State University College of Medicine (VKR), Columbus, OH; Section of General Medicine, Department of Internal Medicine, Yale University School of Medicine (JSR), New Haven, CT; Division of Otolaryngology–Head and Neck Surgery, Brigham and Women’s Hospital (RKVS), Boston, MA; Department of Otolaryngology–Head and Neck Surgery, Massachusetts Eye and Ear (RX), Boston, MA.

Source of Funding: Mass General Brigham Centers of Expertise and American Association for Cancer Research.

Author Disclosures: Dr Ross currently receives research support through Yale University from Johnson & Johnson to develop methods of clinical trial data sharing, from the FDA for the Yale-Mayo Clinic Center for Excellence in Regulatory Science and Innovation (CERSI) program (U01FD005938), from the Agency for Healthcare Research and Quality (R01HS022882), and from Arnold Ventures, and he formerly received research support from the Medical Device Innovation Consortium as part of the National Evaluation System for Health Technology and from the National Heart, Lung, and Blood Institute of the National Institutes of Health (R01HS025164, R01HL144644). The remaining authors report no relationship or financial interest with any entity that would pose a conflict of interest with the subject matter of this article.

Authorship Information: Concept and design (RX); acquisition of data (DTH, RX); analysis and interpretation of data (DTH, JSR, RX); drafting of the manuscript (DTH, RX); critical revision of the manuscript for important intellectual content (DTH, VKR, JSR, RKVS, RX); statistical analysis (DTH, RX); provision of patients or study materials (RX); obtaining funding (RX); administrative, technical, or logistic support (VKR, JSR, RKVS, RX); and supervision (VKR, JSR, RKVS, RX).

Address Correspondence to: Roy Xiao, MD, MS, Department of Otolaryngology–Head and Neck Surgery, Massachusetts Eye and Ear, 243 Charles St, Boston, MA 02114. Email: roy_xiao@meei.harvard.edu.

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